Civil service union Prospect has warned that Reform UK’s proposals for public sector pensions would be the "height of irresponsibility", creating a two-tier system.
In a lecture at Bloomberg yesterday evening, Reform UK deputy leader Richard Tice said the party would look “seriously at the whole issue of defined benefit pension schemes in the public sector", which he labelled "unsustainable".
“I don’t think it’s reasonable to sit down with unions and to say for new employees, we can do this differently,” Tice said. “The private sector did this 20-25 years ago. But if we’re not even prepared to have that discussion then we’re just not going to make the progress we need to.”
Responding to Tice's speech, Prospect deputy general secretary Steve Thomas warned the policy, if introduced, "would have a profound impact on existing civil servants".
"The cost pressure that this policy would introduce in departmental budgets would inevitably lead to tighter spending review allocations, with real impacts on pay and pensions for all staff, not just those on the new pension terms," he said.
Thomas said it would also likely lead to "more churn and a deepening of the recruitment and retention crisis in specialist roles within the civil service, because staff would no longer have the incentive of a good pension, which is often one of the ways that the civil service competes with higher-paying private sector competitors for talent".
“A two-tier pension system is not in anyone’s interests," Thomas added. "To introduce one based on an entirely false claim about the sustainability of the current pensions system would be the height of irresponsibility.”
In his speech, Tice said the “liability for the unfunded pensions schemes in public sector in the UK has grown in the last from about £750bn to somewhere between £1.5trn, according to the OBR, but some think it could be as high as £2.5trn”.
“What we do know is that it’s growing, that liability, off balance sheet, is growing at somewhere between £30 and £50bn per year,” he added.
However, Prospect's general secretary Mike Clancy pointed out that the Office for Budget Responsibility figures show the cost of the current schemes is projected to fall as a percentage of GDP and that the OBR has said “these schemes do not pose a significant fiscal risk”.
Clancy said Reform’s claims that the costs of pensions are unsustainable are "simply factually incorrect" and that the real risk to public finances “would be more Mickey Mouse economic policies like these”.
David Luxton, deputy general secretary of the Civil Service Pensioners’ Alliance, an independent, non-political organisation which campaigns and lobbies on behalf of civil service pensioners, also criticised Tice’s proposals.
“Civil service pensions are a promise, not a liability. They are a cornerstone of public service, providing modest but vital income security for those who dedicated their working lives to serving the country, said Luxton, who is also a spokesperson for Later Life Ambitions, which brings together several different pensions lobby groups and represents more than 250,000 older people across the UK.
“The ‘gold-plated’ myth bears no resemblance to reality. The average civil service pension is around £9,750 a year. That’s a modest sum that reflects steady, not lavish, earnings. Civil service schemes have been reformed repeatedly to ensure fairness and sustainability. They are clearly defined, not open-ended or uncontrolled."